I can't believe it's fall already.  Weather wise the summer was disappointing. I think I read that we had 10.5 inches of rain in July.  Then we had two hot weeks in August, and now we are rolling into October. What happened?

The only good thing I have to report is my two youngest sons are back to school.  Amen!!!!!

 

Establishing a retirement savings dollar amount has become a moving target in the recent years.  Over the last few years we have experienced unprecedented changes in our economic and social backdrop.  We have lived through the chaos of 9/11, only followed a few years later by the disruption of the banking system and the failure of Bear Sterns - a corporation that had survived the depression - and most recently, the devaluation suffered by the housing market and consumers walking away from their mortgages. 

These events were unprecedented, and had a dramatic effect on the stock market returns over the last decade.  They have created an abnormally low shift in annualized returns.  This has caused the issue of compounding to be revisited.  What does this mean?  Simply, we all need to save more!!!  

How do you save more money? The obvious answer would be to spend less, but not often easy.  The second alternative would be to work longer.  Not everyone has this opportunity (although this may not be the right word), but the reality is spending more time in the workforce is the most feasible way to offset the economic pressure we have all faced over the last few years.

As I like to remind everyone, unless you have an extended health care coverage, it is always wise to put off retirement until age 65, when you qualify for Medicare. Health care costs create havoc on budgets and premiums rise at a rate greater than inflation.

Tax-deferral - Let us not overlook retirement plans at work.  Many of you have 401(k)s, 403(b)s or Thrift Plans.  Please do everything you can to maximize those plans.  If you don't have access to these plans, then try to systematically have withdrawals taken from your check monthly and placed in an IRA account.  We have all seen the time/value of money equation.  The sooner you save, the greater the compounding rate and the more likely you are to feel comfortable financially in retirement.   Social Security is in flux.  It is currently under funded.  The age to capture full retirement benefits keeps moving up.  You don't want financial surprises at age 70.

Lastly, alternative investments offer a good hedge against a down market, but not necessarily a guarantee against losses.  Alternatives have a low correlation to stocks and bonds, and are not for everyone.  First, you must have a large enough portfolio to diversify into this asset class.  Traditionally, alternatives are thought of as REIT's or oil drilling rights.  Today you have far more of a selection in this category, with lower volatility.  Second, these assets usually require that you remain fully invested in them for a number of years.  Also, consider that these assets are more volatile than your standard mutual fund. 

If you have any questions regarding alternative investments, please feel free to contact me.

The market was showing great signs of strength this quarter, except for the last 3 days during the week of September 21.  Some of you may be thinking, is this the turn-around point?  Are we going back down?  Are investors just taking profits?  Others of you (though not many of my clients) are still waiting on the sidelines.  As for my feelings? OK, this isn't psychic hotline, but I have to think that the last quarter is still going to be attractive.  Yes, that means I think there will be gains to be had.  I am not a betting woman, but the portfolios are looking pretty good, and most of you have smiley faces on right now.  As long as you are not trying to sell your house, I think you will be happy with the way the calendar year ends and the market performs.  The following numbers are for the week ending September 25, 2009.